Digicel says new telecoms deal will hurt customers and employees
A strong warning today that Cable & Wireless Communications’ (CWC) buyout of Columbus International has come at too a high a price, not only for the British telecommunications giant, but also for Barbados and the rest of the Caribbean, which now face the prospect of job losses and high prices.
In a statement today — its second since the November 6 megadeal was announced at a cost of over US$3 billion — regional competitor Digicel admitted to having an interest in acquiring Columbus several months ago, but said it had concluded that “the value of Columbus Communications was no more than US$2 billion”.
Digicel however rejected the assertion made by the UK-listed Cable & Wireless that its Irish competitor was suffering from “sour grapes”, saying the statement “couldn’t be further from the truth as the reality is Digicel was not prepared to over-pay for the business – unlike Cable & Wireless”.
The company went on to warn that with the proposed combined entity having a near stranglehold on the fixed line, broadband and cable TV markets across the region, “this monopolistic position will translate to higher prices for consumers, a slower pace of investment and innovation, job losses and ultimately reduced economic stimulation for the Caribbean – not least because consumers will be looked on to pay up for the massive premium that was paid for the business”.
Digicel has therefore called on all regulatory bodies throughout the Caribbean to see through the “smokescreen” put up by Cable & Wireless/Columbus and to subject the proposed transaction to the “fullest regulatory scrutiny”.
“Any discussion of whether or not Digicel was interested in buying Columbus is a smokescreen put up by Cable & Wireless as it tries to railroad through a very expensive transaction that will put enormous pressure on its balance sheet,” insisted the Digicel Group CEO Colm Delves.
He said “while Digicel did take a look at Columbus, the simple fact is that Cable & Wireless paid some US$1 billion more for Columbus Communications than in our view it is actually worth – a fact that should be of grave concern to its shareholders and the public alike.”
“There is a real probability that customers will ultimately have to pay the price for the exorbitant price that was agreed. Cable & Wireless has said that it can’t ‘talk about pricing and plans until the deals are done’ and that statement alone should set alarm bells ringing,” he added.
Delves also said it was vital that the good of consumers was top of mind with regulators and governments, while noting that “Digicel has been at the forefront of competition in the communications industry and that competition is key to a vibrant market and to economic development”.
“We cannot risk jeopardizing all that has been achieved to date. The proposed transaction must be examined properly and in the fullness of time by all of the relevant agencies to ensure that consumers’ interests are protected and promoted,” he stressed.